News or Noise? Gather CEO Tom Gerace on New England’s Fastest Growing Web Property

4/28/10Follow @wroush

For a while now I’ve been curious about Gather, a privately funded news and social networking site based in downtown Boston. I knew that Gather was founded by marketing pro Tom Gerace, that it is owned in part by the public radio operator American Public Media, that it has an unusual way of paying users for contributing content, and that its traffic has been rising through the roof—the company claims that the number of unique visitors it attracts each month is 7.2 million, a 400 percent increase just in the last five months.

But I didn’t really get Gather. I didn’t understand who reads its articles, who writes them, or how the company makes money. And I was a bit skeptical, to be honest, about whether there’s much value in Gather’s content, which is largely a blend of news, reviews, recipes, celebrity gossip, and how-to articles, much of it seemingly cribbed by users from more traditional journalistic publications. But it’s hard to argue with 7 million unique visitors. Gather claims that its “reach,” meaning the number of households exposed to the site every day, exceeds that of CBS.com, CNBC.com, iVillage.com, PBS.com and even USAToday.com.

Tom GeraceI recently sat down with Gerace for a long conversation about the company, which is his second startup, and also his second venture in what he calls “pay-for-performance” marketing. The first was BeFree.com, an affiliate marketing network that he founded in 1996 with his brother Sam. That company’s business was to sign up online merchants to send business to e-retailers like Barnesandnoble.com, LendingTree, and Dell in return for sales commissions. Gerace (pronounced je-RACE) says he learned from BeFree—which was purchased by rival ValueClick in 2002 for $128 million in stock—that paying commissions creates an “ecology” with “directly aligned incentives” where the affiliates themselves figure out how to win more customers over time. “We got to realize the power of that as billions of dollars in commerce flowed over our platform without us doing any business development,” Gerace says.

So the first thing I came to understand about Gather is that it represents Gerace’s attempt to recreate an Internet business driven by a pay-for-performance marketing model, but in the realm of user-generated news and discussion rather than e-retailing. In fact, Gerace, who graduated from Harvard in 1993 and spent three years writing case studies at Harvard Business School before plunging into entrepreneurship, seems to have deliberately gone searching, after the BeFree experience, for an Internet niche where he could apply the same core concept—call it the Tom Sawyer maneuver—of getting your users to do a lot of the work for you.

He chose the online media business, where traditional notions of authority have been blown to smithereens and anyone who can achieve high search-engine rankings can draw in traffic—which can then be monetized through advertising and other forms of marketing. In Gerace’s eyes, it’s all a matter of casting a sufficiently wide net.

“If you go back to 1990, everything we knew we got from one newspaper, a couple of magazines, and likely a nightly news or morning radio show,” Gerace says. “In effect, we were handing off our information sourcing to three or four editorial groups who told us what we needed to know. Today it’s completely different. More than half of all traffic, even to the largest news sites, comes from search. There are 15.5 billion searches run a month, which means 15.5 billion opportunities to … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • http://www.dailygrommet.com Jules Pieri

    This model reminds me of Demand Media, whose writers are paid in a similar fashion, albeit more straightforwardly and with seemingly much more editorial oversight. Demand Media concentrates more on how-to articles that will get a lot of SEO lift, so the content is rather different. But Tom is right that there is a lot of money to be made in this arena. And he is also right that the local investment community is not very attuned to these models. Demand Media is in L.A.

    And we have a little BzzAgent-ness in the mix too. I was surprised at that extension of Gather.

    I do share your hand-wringing, Wade. We get the world we deserve if we can’t discern quality.

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  • Dan

    Wade – I think your vision of quality is more of an elitist view. Tom and the folks at Gather are bringing conversations to an area where people can discern and discuss from a bottom-up model rather than a top-down one. People feed information to one another and discuss topics organically rather than being told what to think by a few folks in the mass media. Those quality conversations are a new form of news and worth cultivating. Gather’s model seems like a progressive view of future news consumption – to me that is more “quality” than you will get from traditional elite mass media.

  • Gary R.

    Conversation? What a load of crap!

    Take a look at any of the content that is generating this exponential growth for Gather and see how much of it is being discussed at all…Here’s the answer: NONE.

    Much of the content (in fact almost ALL of it) regularly violates copyright and fair use (as well as decency in some cases), and is simply copied from other sources online just to get traffic in the door.

    Gather is very quickly becoming a site devoid of any real substance and it is sad to see Gather’s CEO try to package crap in gold foil.

    Gather is encouraging members to exploit tragedy and gossip to make a buck.

    What a fall from grace, for him and the site.

  • Kathy

    I had a long comment but it disappeared. We who’ve been here since the beginning abhor the so-called content (lack of content) from the Socialwrite program.

    That Gerace instituted this program means he was desperate for SEO views, and that his other programs failed in this regard.

    We consider it an absolute betrayal of our fiction, poetic, visual and real journalistic skills and talents to be subjected to daily onslaughts from the check out aisle at the supermarket.

    In the beginning, in late 05 and 06, when many top quality people joined from Boston Globe’s Jan 14, 2006 article that Gather.com is a site for writers, when Gather co-hosted the First Chapters’ Contests with Simon & Schuster (see a NYT article in 06 about this), when Gather co-hosted a Romance contest, a music contest, a True Crime story contest…a Borders/Mitch Albom contest….

    and you can see how Gerace has betrayed the faithful membership in his many about-face turns to try to generate SEO views.

    It appears he’s won this round, but many of the best people left for FB or for real publishing.

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